Meta CEO Mark Zuckerberg sent a letter to employees, saying that the company is laying off 13% of its staff. Meta is letting go 13% of its workforce but that does not come as a surprise bearing in mind that the company reported dismal earnings in Q3 2021. The 13% of the workforce expected to be laid off translates to around 11,000 employees.
This move comes barely a month after Facebook owner issued a weak Q4 guidance, weighing on the firm’s stock.
Meta Shares Gain 4% On Layoffs Announcements
Meta Platforms is now planning to lay off 13% of its workforce as highlighted in Mark Zuckerberg’s letter to employees published on November 9, 2022. This letter was made public only two days after reports that Facebook owner is getting ready for a huge-scale workforce reduction. Shares of Meta are up more than 4% in premarket trading.
Zuckerberg said in the letter:
“Today I’m sharing some of the most difficult changes we’ve made in Meta’s history. I’ve decided to reduce the size of our team by about 13% and let more than 11,000 of our talented employees go. We are also taking a number of additional steps to become a leaner and more efficient company by cutting discretionary spending and extending our hiring freeze through Q1.”
This move puts a huge emphasis on Meta’s struggles in 2022, with the firm’s stock dropping over 70% year-to-date. In October, the tech giant issued dismal guidance for the forthcoming fiscal Q4, scaring off many investors and sending Meta’s shares to another drop.
In recent months, Meta has been grappling with increasing costs that surged by 19% year-over-year in Q3 to reach $22.1 billion. As a result, the firm announced a hiring freeze in September, marking its first cost-cutting and restructuring plan in 18 years.
Zuckerberg wrote that Meta Platforms Inc is laying off staff in all business groups, although the 38-year-old billionaire insisted that recruiting will be “disproportionately affected” as the firm plans to slow the pace of hiring in 2023. All the affected employees will get 16 weeks of pay and two additional weeks for every year at the firm, coupled with six months of health insurance.
Buy Crypto NowMeta Faces $100B In Metaverse Costs In 2023
Since it rebranded in 2021, Meta has been making some aggressive investments in the metaverse. The firm’s bet on the virtual world has cost around $9.4 billion in 2022 and that figure might increase to a staggering $100 billion in 2023, based on Meta’s projections.
Mark Zuckerberg previously stated that it might be more than 10 years before Meta will be able to reap its metaverse rewards. That statement pushed investors to lose patience and liquidate their META holdings. In its past guidance, Meta also trimmed the outlook for its flagship metaverse platform Horizon Worlds because of tepid demand.
With the latest announcement, Meta now becomes the latest in a series of tech behemoths that announced layoffs in recent months. The macroeconomic conditions involving record-high inflation and interest rates have pulverized stock and crypto prices, compelling most firms to look for different ways to cushion the damage.
